Mining companies across the globe have altered their vision. These companies are no longer focused on large acquisitions, which were prevalent between 2006 and 2012 when the mining sector was booming.
With the slump in the commodities environment and fluctuating prices, mining companies have changed their strategy and are concentrating on making their existing assets more efficient and profitable. Whether it is Rio Tinto, BHP Billiton or Anglo American, large mining companies are looking to boost productivity gains.
For many mining contractors, it may come as a surprise to learn that something as mundane as the operating time of a mining vehicle is generating interest in mining companies. Global operators are looking to boost truck efficiency, and many have succeeded, as was seen in their latest financial results.
BHP Chief Executive Andrew Mackenzie drew a parallel between Formula One teams and mining companies by pointing out how the motor racing teams made tiny improvements to reduce pit stop times. However, it has to be said that the vehicles used by mining companies are gargantuan and much slower than the F1 cars.
Mackenzie revealed that BHP’s truck hours hauling coal have increased 7.5 per cent in a single year. He stated that this increase is equivalent to an extra month of operations per truck per year. He believes that this can be improved still further. His statement comes at a time when BHP had to bear a net loss of $6.4 billion in 2015-16. Most of the losses were due to asset writedowns.
With commodity prices heading south, many mining companies have been looking at ways to reduce costs. With shareholders stressing the importance of reducing debt and costs, mining companies are not spending money on new projects. Even jobs have been reduced, with mining contractors being shown the door along with permanent staff. Rio Tinto had a 66,000-strong staff in 2013, but by 2015 that number was down to 55,000. The same holds true for Anglo American, which has reduced its workforce substantially since 2012.
These changes are here to stay until the commodity market recovers and prices begin showing signs of improvement. Until this happens, miners will be looking to improve their existing ground assets, such as trucks, with the aim to improve productivity and reduce operational costs.